By Tyler Petzel, CPA and Derek Bostrom, CPA
Blog adapted from Important tax considerations for selling your business under OBBBA – Abdo
Enacted on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) brought significant changes to the business landscape. In this article, Abdo Partner and Manufacturing leader Tyler Petzel and Senior Manager Derek Bostrom highlight the key tax areas of the OBBBA that are essential to consider before and after selling your business.
Section 199A: Qualified Business Income (QBI) Deduction
OBBBA made Section 199A permanent, expanded phase-in thresholds, and introduced a minimum deduction. Sellers should increase their W-2 wages early in a sale year to maximize their QBI deduction. If you’re selling your business, the sale structure (asset vs. stock) affects QBI treatment.
Opportunity Zones (QOZ)
Originally created by the 2017 Tax Cuts and Jobs Act, the OBBBA expanded current Opportunity Zones and introduced new rural zones. Sellers can reinvest capital gains into QOZ funds, with new and expanded investment options. This provides tax deferral and potential reduction benefits.
Bonus Depreciation & Section 179
The OBBBA lets businesses immediately deduct the full cost of new assets starting January 19, 2025, and increased the Section 179 limit. This affects how businesses – buyers and sellers – negotiate prices, as buyers will consider these changes as tax benefits.
Pass-Through Entity Tax (PTE) Elections
Business owners must carefully evaluate the timing of PTE elections in the year of sale to fully take advantage of the benefits related to state and local tax (SALT) workarounds. Doing so increases financial flexibility and can enhance post-sale liquidity.
State and Local Tax (SALT) Deduction Changes
OBBBA temporarily raises the SALT cap to $40,000 starting in 2025, subject to income-based phaseouts. Planning around these phaseouts, along with the consideration of PTE, may offer you eligibility for additional deductions.
Qualified Small Business Stock (QSBS)
For stock issued after July 4, 2025, QSBS now offers shorter tiered holding periods: 50% exclusion at 3 years, 75% at 4 years, and 100% at 5 years. The per-issuer cap has increased to $15 million exclusion and the gross asset threshold increased to $75 million. If you’re selling your business, be sure to confirm eligibility well before you are planning to sell in order to maximize tax benefits.
Section 174 (R&D)
OBBBA restored the ability to fully expense domestic research and experimental (R&E) expenditures beginning in 2025. Sellers should understand how capitalized R&E from prior years will be treated in negotiations and whether acceleration elections apply.
Estate Tax Exemption
The OBBBA increased (permanently) the federal exemption on Estates to $15 million per person in 2026. Sellers should review their estate plan before and after the sale to maximize this benefit.
Minnesota State Nonconformity
As of January 28, 2026 Minnesota does not conform to the changes listed in the OBBBA and will look to potentially conform to these changes during the 2026 legislative session. Separate modeling and strategized planning are required for state taxes.
Pre-Sale Actions
- Model your business’s sale structure for 199A benefits.
- Review depreciation recapture exposure.
- Validate QSBS eligibility and holding periods.
- Evaluate Section 174 capitalization and expensing elections.
- Plan for gifting and trust strategies before signing a Letter of Intent.
Post-Sale Actions
- Reinvest gains timely into QOZ if desired.
- Reinvest real estate gains in Sec.1031 like-kind exchange assets if desired.
- Maximize PTE state tax benefits where possible.
By addressing and understanding these areas, sellers can better prepare for the sale process, anticipate buyer strategies, and maximize the financial and tax benefits of their business transactions under the OBBBA framework. Our advisors can guide you through the tax planning process to ensure you’re taking advantage of available benefits while maintaining compliance.
